By ANNE D’INNOCENZIO AP Retail Writer
NEW YORK (AP) — Target Corp. offered a solid annual profit outlook on Tuesday and said that it hasn’t seen anything related to the spreading new virus so far that would affect its financial targets.
The outlook came as the discounter reported strong fourth-quarter profits, though its sales were weighed down by weak demand for toy and electronics during the crucial holiday shopping season.
Target joins a string of other retailers with disappointing sales during the shortest holiday shopping period since 2013. Walmart had a rare sales shortfall, while Macy’s and J.C. Penney saw sales decline during the fourth quarter. Kohl’s posted disappointing holiday sales but on Tuesday reported that fourth-quarter earnings and revenue beat Wall Street expectations. The department store’s CEO Michelle Gass said in a statement that she was encouraged by the “acceleration of traffic and new customer acquisition in our stores and online driven by the unprecedented level of new brands and partnerships.”
Nordstrom is scheduled to report fiscal fourth-quarter results after the markets close Tuesday.
Retailers already dealing with higher costs from an ongoing trade war with China struggled to get potential shoppers through the doors sooner, and the start of 2020 doesn’t appear to be offering much relief. A new virus has spread beyond China after disrupting supply chains there and is now hampering operations in the United States, where there are more than 100 cases in at least 11 states. There have been at least six deaths related to COVID-19 in Washington State.
Major companies are cancelling non-essential domestic travel plans for its workers. In fact, Minneapolis-based Target canceled its New York investors meeting Tuesday and broadcast the event from Minnesota. However, discounters like Target should benefit in the short term as shoppers have been stocking up on essentials like hand sanitizers, canned food and cases of water to prepare themselves if the virus spreads in the U.S.
During the call with analysts, Target executives said it hasn’t seen a large impact on its business and outlook and is working with each of the the factories.
“We are monitoring the situation hour by hour as conditions evolve,”said Target CEO Brian Cornell on the call.
Target delivered net earnings of $834 million, or $1.65 per share, for the three-month period ended Feb. 1. That compares with $799 million, or $1.52 per share, in the year-ago period. Revenue rose 1.8% to $23.13 billion. Analysts were expecting $1.65 per share on revenue of $23.44 billion, according to FactSet.
Comparable sales — or sales in stores open at least a year — rose 1.5%. That included online sales growth of 20% in the period. That marked its 11th consecutive quarter of growth in comparable sales, a key metric of a retailer’s health. Same-day services including picking up orders at the store or curbside, accounted for more than 80%.
At Kohl’s, sales at stores opened at least a year were unchanged during the quarter compared to the year-ago period.
Target said that for the year it expects adjusted earnings per share to be in the range of $6.70 to $7.00 per share. Analysts were expecting $6.88 per share. For they year, it expects low single digit increase in comparable sales.
Shares of Target Corp. fell nearly 2% or $1.72 to $107.34 in late morning trading.
